Whose Default Is It?

July 21, 2011

Sealing a deal on the debt ceiling and deficit reduction is proving to be as elusive as finding a resolution to the Israeli-Palestinian conflict.

The irony is that in this country, we're all presumably on the same side. Our political leaders, while ideologically diverse, should at least have a common interest in avoiding a default on U.S. loans that most economists say could have a disastrous effect on our already shaky economy.

Now comes word that even Israel bonds might be subject to the same downgrade review that Moody's, a key credit-rating agency, would apply to U.S. bonds. The credit rater said it was reviewing U.S. bonds for possible downgrade "given the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on U.S. Treasury debt obligations."

As JTA reported, Moody's has said that bonds issued by the governments of Israel and Egypt "that are guaranteed by the U.S. government were also placed on review for possible downgrade."

With the Obama administration and the Republican-led U.S. House of Representatives locked in a nasty battle over the terms of raising the debt ceiling, the organized Jewish community finds itself caught in the middle of these politically explosive issues.

In meetings last week, leaders of the national Jewish federation system and other groups met with Democratic senators at an annual meeting organized by the Democratic Steering and Outreach Committee with the assistance of the National Jewish Democratic Council.

Sen. Carl Levin (D-Mich.), the chairman of the Armed Services Committee, and Sen. Ben Cardin (D-Md.), both of whom are Jewish, reportedly linked requests for funding to the need for Jews to lobby Republicans to help pass the budget, JTA reported.

The remarks by Levin and Cardin came after the chairwoman of the Jewish Federations of North America's board of trustees, Kathy Manning, appealed to the senators to protect a number of funding programs.

She specifically cited Medicaid, the program that funds the poor, and Homeland Security grants, which help nonprofit institutions implement security precautions.

While Jewish groups have often lobbied hard to defend discrete budgetary items, they are loath to take sides in a bitter partisan fight over spending and taxes.

The budget debates will undoubtedly continue, but time is of the essence as the Aug. 2 deadline for a potential default rapidly approaches. Let your representative know that the dangerous brinksmanship playing out in Washington will not move us any closer to making the tough decisions necessary to reach an agreement.

It is time for our political leaders to stop the politicking and start making the compromises necessary to seal a deal.